Revenue of $29.5 million, compared to $27.6 million in the fourth
quarter of 2015

Net loss of $1.6 million, or ($0.06) per share, compared to a net loss
of $3.6 million, or ($0.13) per share, in the fourth quarter of 2015

EBITDA of ($0.4) million, compared to EBITDA of ($2.0) million in the
fourth quarter of 2015

Financial highlights, on a non-GAAP basis, which excludes share-based
compensation, amortization of intangibles, realignment expenses and
income taxes, include:

Non-GAAP net income of $2.8 million, or $0.09 per share, in the fourth
quarter of 2016, compared to non-GAAP net loss of $1.3 million, or
($0.05) per share, in the fourth quarter of 2015

Non-GAAP EBITDA of $3.7 million, compared to non-GAAP EBITDA of ($0.1)
million in the fourth quarter of 2015

“We entered 2016 with a plan to: 1) pivot to cybersecurity, 2) transform
our go-to-market and product delivery capabilities, and 3) set a
foundation for long-term, sustainable growth. I’m very happy to report
that we executed on all of these objectives. Additionally, we
restructured the business for profitability and exited 2016 in a strong
position,” said Patrick Dennis, Guidance Software’s president and CEO.

Mr. Dennis added, “As we start 2017, we are positioned for another year
of revenue growth and a return to sustained non-GAAP profitability. The
ongoing shift in customer spending to rapid detection and response
solutions like ours, combined with our 2016 cost structure realignment
efforts, puts us in a strong competitive position to drive shareholder
value in 2017 and beyond.”

2017 Financial Outlook

The Company is reaffirming its guidance for the year ending December 31,
2017 as follows:

Revenue is expected to be in the range of $112.0 million to $118.0
million

Non-GAAP pre-tax earnings in the range $0.28 - $0.36 of per share

Non-GAAP EBITDA in the range of $9.0 million - $11.8 million, or
non-GAAP EBITDA margins in the range of 8% - 10%

“In Q4, we completed our restructuring efforts in an effort to support
our EBITDA targets in 2017. We no longer have the costs related to the
proxy fight and the patent litigation and settlement weighing down cash
flow from operations,” stated Barry Plaga, Guidance Software’s CFO and
COO.

Fourth Quarter 2016 Highlights and Recent Noteworthy Events

In October, the Company announced the latest release of EnCase
Endpoint Investigator, featuring a new enhanced agent to enable
off-network data collection. The new enhanced agent in EnCase Endpoint
Investigator gives customers the power to dramatically reduce internal
threats, even when endpoint devices are disconnected from the network

In November, the Company announced a partnership agreement with
DarkMatter, an international cybersecurity firm headquartered in the
United Arab Emirates, to integrate Guidance Software products,
including EnCase
Endpoint Security, EnCase
Endpoint Investigator, and EnForce
Risk Manager, into its comprehensive cybersecurity solutions and
resell to clients across the Middle East.

Also in November, for the seventh consecutive year, SC Magazine
included Guidance forensic investigations solutions EnCase Endpoint
Investigator and EnCase Forensic as finalists for their Best Computer
Forensic Solution Award. Finalists are recognized for outstanding
leadership and for providing superior security products to the
information security industry

The Company will host a conference call today at 2:00 p.m. Pacific time,
5:00 p.m. Eastern time to discuss its fourth quarter 2016 results.
Participants should call (877) 407-0784 (North America) or
(201) 689-8560 (International) at least five minutes prior to the
conference call.

A supplemental information slide presentation, webcast and replay of the
call may also be found online through Guidance Software's Investor
Relations website at http://investors.guidancesoftware.com/events.cfm.
Registered users may access this content over the Internet, and there is
no cost to register. If you have not already registered, please do so at
least 15 minutes prior to the start of the conference call.

An audio-only replay of the call will be available by calling (844)
512-2921, passcode 13653431, available from 8:00 pm Eastern Time,
February 13, 2017, through midnight Eastern Time, February 20, 2017.

About Guidance Software:

Guidance (NASDAQ: GUID) exists to turn chaos and the unknown into order
and the known so that companies and their customers can go about their
daily lives as usual without worry or disruption, knowing their most
valuable information is safe and secure. The makers of EnCase®, the gold
standard in forensic security, and EnForce™, an automated cyber risk
management platform, Guidance provides a mission-critical foundation of
market-leading applications that offer deep 360-degree visibility across
all endpoints, devices and networks, allowing proactive identification
and remediation of threats. From retail to financial institutions, our
field-tested and court-proven solutions are deployed on an estimated 33
million endpoints at more than 70 of the Fortune 100 and hundreds of
agencies worldwide, from beginning to endpoint.

Guidance Software®, EnCase® and EnForce™ are trademarks owned by
Guidance Software and may not be used without prior written permission.
All other trademarks and copyrights are the property of their respective
owners.

Non-GAAP Financial Measures

Guidance Software reports its financial results in accordance with
generally accepted accounting principles, or GAAP. To supplement this
information, we present from time to time non-GAAP gross profit,
operating expenses, operating income (loss) and net income (loss), as
well as non-GAAP net income (loss) per share. Non-GAAP gross profit
consists of GAAP gross profit as reported and adds back realignment
expenses and share-based compensation expense booked for GAAP purposes.
Non-GAAP operating income (loss) consists of GAAP operating income
(loss) as reported and excludes realignment expenses, amortization of
intangibles, litigation settlements, proxy contest expenses and
share-based compensation expense. Non-GAAP net income (loss) consists of
GAAP operating income (loss) as reported and excludes realignment
expenses, amortization of intangibles, litigation settlements, proxy
contest expense and share-based compensation expense and the income tax
(benefit) provision.

We use these non-GAAP financial measures for internal managerial
purposes, when publicly providing our business outlook, and to
facilitate period-to-period comparisons. We describe additional
information specific to each item excluded from our non-GAAP financial
measures below. Management and the Board of Directors do not consider
these excluded items for purposes of evaluating the performance of the
Company, its business units and its management teams and when making
decisions to allocate resources among the Company's business units.
Management generally compensates for limitations in the use of non-GAAP
financial measures by relying on comparable GAAP financial measures and
providing investors with a reconciliation of the non-GAAP financial
measures only in addition to and in conjunction with results presented
in accordance with GAAP. We believe that these non-GAAP financial
measures reflect an additional way of viewing aspects of our operations
that, when viewed with our GAAP results, provide a more complete
understanding of factors and trends affecting our business. These
non-GAAP measures should be considered as a supplement to, and not as a
substitute for, or superior to, the comparable financial measures
calculated in accordance with GAAP.

A reconciliation of our non-GAAP forward-looking measures to
corresponding GAAP forward-looking measures is not available as a result
of the uncertainty, and potential variability, in the forward looking
estimates of the reconciling items between such non-GAAP forward-looking
measures and the comparable forward-looking GAAP measures. Certain
factors that are materially significant to our ability to estimate these
items are out of our control and/or cannot be reasonably predicted,
including the timing and amount of realignment expenses, amortization of
intangibles, share-based compensation expense and income taxes.

Realignment Expenses. Realignment expenses represent severance
and related employment costs associated with a reduction in headcount.
Guidance Software excludes realignment expenses from non-GAAP gross
profit, non-GAAP operating expenses, non-GAAP operating income (loss)
and non-GAAP net income (loss) because it believes (i) the amount of
such expenses in any specific period may not directly correlate to the
underlying performance of Guidance Software business operations and (ii)
such expenses are not expected to recur in future periods.

Proxy Contest Expenses. Proxy contest expenses represent one-time
legal and other consulting expenses related to the proxy contest between
Guidance Software and its founder and former chairman, which was settled
on April 22, 2016. Guidance Software excludes proxy contest expenses
from non-GAAP operating expenses, non-GAAP operating income (loss) and
non-GAAP net income (loss) because it believes (i) the amount of such
expenses in any specific period may not directly correlate to the
underlying performance of Guidance Software business operations and (ii)
such expenses are uncommon and not expected to recur in future periods.

Litigation Settlements. Litigation settlement expense represents
a one-time settlement expense of a patent infringement lawsuit with
MyKey Technology, LLC. Litigation settlement income represents a
one-time settlement received from an indemnity lawsuit related to the
patent infringement lawsuit with MyKey Technology, LLC. Guidance
Software excludes litigation settlement expense and income from non-GAAP
operating expenses, non-GAAP operating income (loss) and non-GAAP net
income (loss) because it believes (i) the amount of such expense or
income may not directly correlate to the underlying performance of
Guidance Software business operations and (ii) such expense and income
are uncommon and not expected to recur in future periods.

Amortization of Intangibles. Amortization of intangibles is a
non-cash expense arising from the acquisition of intangible assets in
connection with acquisitions. Guidance Software excludes
acquisition-related amortization expense from non-GAAP operating
expenses, non-GAAP operating income (loss) and non-GAAP net income
(loss) because it believes (i) the amount of such expenses in any
specific period may not directly correlate to the underlying performance
of Guidance Software business operations and (ii) such expenses can vary
significantly between periods as a result of new acquisitions and full
amortization of previously acquired intangible assets. Investors should
note that the use of these intangible assets contributed to revenue in
the periods presented and will contribute to future revenue generation
and the related amortization expense will recur in future periods.

Share-based Compensation Expense. Share-based compensation
expense is a non-cash expense arising from the grant of stock awards to
employees. Guidance Software excludes share-based compensation expense
from non-GAAP gross profit, non-GAAP operating expenses, non-GAAP
operating income (loss) and non-GAAP net income (loss) because it
believes (i) the amount of such expenses in any specific period may not
directly correlate to the underlying performance of Guidance Software
business operations and (ii) such expenses can vary significantly
between periods as a result of the timing of grants of new share-based
awards. Investors should note that share-based compensation is a key
incentive offered to employees whose efforts contributed to the
operating results in the periods presented and are expected to
contribute to operating results in future periods and such expense will
recur in future periods.

Forward Looking Statements:

This news release contains forward-looking statements within the meaning
of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that forward-looking
statements in this release involve risks and uncertainties that could
cause actual results to differ materially from current expectations.
There can be no assurance that demand for Guidance Software's products
will continue at current or greater levels, or that the Company will
continue to grow revenues, or be profitable. There are also risks that
Guidance Software's pursuit of providing network security and
e-discovery technology might not be successful, or that if successful,
it will not materially enhance Guidance Software's financial
performance; that the Company could fail to retain key employees; that
changes in customer requirements and other general economic and
political uncertainties could impact Guidance Software's relationship
with its customers; and that delays in product development, competitive
pressures or technical difficulties could impact timely delivery of
next-generation products; and other risks and uncertainties that are
described from time to time in Guidance Software's periodic reports and
registration statements filed with the Securities and Exchange
Commission. The Company specifically disclaims any responsibility for
updating these forward-looking statements.